Short Sale Will Set You Free!

Posted on 19. May, 2010 by trevana in Blog

Nope!  It probably won't happen.  I hear it a lot.  "I sold the house, they didn't foreclose and they got the most money they could in this market, what more do they want?"

In recourse states the lender wants it all or at least as much money as they can get back or feel is recoverable.  That amount would include as much of the principle balance that is owed or what you agreed to borrow under the terms of your note.  Just because a lender agrees to a short sale, it does not eliminate their ability to go for the deficiency judgment or demand a Promissory Note as a condition of closing.

The secret word to set you free is "Satisfied" or the lender express their intention in writing not to pursue a deficiency judgment.  It would be a condition one way or another written on their payoff letter.

Strategic Default

Posted on 14. May, 2010 by trevana in Blog

It's unfortunate when a family loses their home in foreclosure.  The reason behind the loss of a home can be a result of any combination of circumstances.  Loss of income, divorce, medical issues are just a few of the reasons families make the hard decision that they can no longer make their mortgage payments.  Approaching the mortgage company for a short sale is considered a privilege when granted.  A true hardship has been demonstrated and a relief from the debt is sometimes allowed.  These types of defaults are part of the business of lending and are to be expected.

Strategic default is when the homeowner makes a business decision to no longer make the monthly mortgage payment because the property is less valuable than when it was purchased.  More and more homeowners who can afford to make their monthly mortgage payments are opting to exercise this type of default.  Realizing the opportunity to dismiss the debt of their mortgage and seek nicer rental housing at a lower monthly  payment makes good business sense.  But, what a minute.

What seems like a good move may end up to be more costly than keeping the home and making those monthly payments.  Lenders have gone to war to survive  the turmoil of this market and feel they're going to take as many as possible down with their sinking ship.  For those recourse states homeowners are being dogged for deficiency judgments, collection calls, 1099's for the loss of principle and any other legal tactic to recoup any money from these strategic defaults.   Stop and realize in your decision process, as a homeowner you may dismiss your lender for the remaining term of your mortgage, but your debt may follow you for years, and could eventually be attached to your new home years down the road.

Strategic default is not an option for a short sale, nor an option for the homeowner who wants peace of mind.

4000 Douglas Rd. | Downers Grove, IL

Posted on 14. May, 2010 by trevana in Blog

4000 Douglas Rd. Downers Grove, IL 60515

Credit Rehab and Deeds-in-Lieu

Posted on 09. May, 2010 by trevana in Blog

In a recent article in the National Mortgage News, "Fannie Mae has decided that certain distressed borrowers who agree to give up their homes as an alternative to foreclosure should get a second chance at homeownership sooner.  Borrowers who grant a deed-in-lieu of foreclosure will benefit with a minimum waiting period."

HAFA program (Home Affordable Foreclosure Alternatives) can allow the homeowner in foreclosure to remain in their home as long as they agree to resume making their mortgage payments and agree to a deed-in-lieu if the property does not sell within 6 months.

Okay, so the idea in all this is to increase the buyer pool down the road.  Currently, it takes a credit rehab period of 4 years or more after a foreclosure to qualify for a new mortgage.  This new consideration starting in July would give the distressed homeowner who works with their lender  a 2 year waiting period to qualify for a new mortgage as long as they have a 20% down payment.   If the distressed homeowner is working with their lender now for a proactive resolution, there should be some reward of homeownership again down the road.   The  high number of future potential buyers will continue to cripple the housing market for years to come by not offering a program to get them back into the market sooner rather than later.  Many homeowners through no fault of their own and currently with good credit are not willing to come to closing with out of pocket dollars to pay off their upside down mortgages.  At least 6 million homeowners have gone through a foreclosure in the last 3 years and 3 million are expected to this year.  Such borrowers are essentially shut out of the housing market through regular financing channels and are beached for the next five years.

I believe avoiding the foreclosure process should be attempted at all costs.  Short sale and deed-in-lieu are better alternatives than a foreclosure and are better for the communities.  From a credit standpoint  they're all the same thing.

Walk Away and Never Look Back

Posted on 16. Apr, 2010 by default in Available Properties, Blog, Foreclosures, News and Real Estate Information, Short Sale

Wouldn't it be nice instead of legally divorcing your spouse and having to deal with the arguing and bickering and all the legal fees  to just walk out the door and not look back?  Or, just because you owe the I.R.S. a little money to just go and hide somewhere thinking you're never going to ever hear from them, EVER?

When someone walks away from their obligation to a lender and that lender eventually forecloses  is it really over? I mean the lender got back THEIR house, right? As we now know the bank is really NOT our friend, but a tough adversary we have to deal with in our daily lives.  Overdraft fees on top of overdraft fees, high over limit fees and not to mention the slightly high interest rates we pay on our credit cards.  ATM fees should be an indication we are just sheep to a predator.  So, why should we think we can walk from a loan and not look back?

The truth is we can't!  Banks, servicing companies and their investors want as much of their money back as possible and walking away is not the answer.  In fact it is the worst thing you can do.  The asset you put up as collateral is your home and walking away makes the asset vulnerable to anyone walking by and taking a piece of the house or burning down without insurance or whatever harm you can think of.  Not your problem anymore?  Eventually, the bank will settle up on your account.  I mean they will eventually sell the house for pennies on the dollar, incur legal fees and pay back taxes and come after YOU.  Lenders  are fat elephants that don't forget.  After a foreclosure the bank may have the option of placing a judgment against you for the outstanding balance, or issue you a 1099 for their loss or gain to you and will do what they can do to  hurt your credit for years to come.  Walking away gives away your right to fight for your money now, and for some creditor to get you later without a fight.

Former homeowners may still be on the hook if there's a difference between what they owe on their mortgage and what the bank could sell it for at auction.  These "deficiency judgements" are ticking time bombs that can explode years after borrowers lose their homes and begin new lives.

Homeowners should try to communicate with their bank to modify their loan,  short sale options to sell, rental option to pay the loan, consider cash for keys or anything else that the government can think of to deal with the problem now.

Trying to settle now can save thousands of dollars down the road.  My suggestion is if you don't speak banking lingo then find someone who does. AND, don't pay anyone upfront fees without results you can live with.